More Best Practices to Organize Tax Information

Here is another thing that I think is a best practice.  We have lots and lots of businesses that use carbon receipts.  The problem with carbon receipts is in very few years they become they’re illegible. They fade or become completely black and you just can’t read them. And to go into an audit where you basically are telling the IRS “Yeah I spent sixty dollars at Walmart for office supplies; trust me even though you can’t read anything on the receipt” is not the best situation to be. So what you could is make a photo copy of that receipt.  Attach the original to the photo copy.  Even if the original should fade over time, the photo copy will still be legible. Now you will have the original receipt as well as a legible copy.   If you’re audited two or three years down the line, you’re golden. You will still know what the expenses were listed on the receipts you still know how it should be presented.

Sometimes there are receipts that you might not remember what the purchase was and what it was used for.  For example I recently received documents from a client that included a receipt for what appeared to be a purchase for candy.  I was unable to determine how the receipt was applied to the client’s return because purchasing candy for your kids is not a deductible expense.  After a discussion with the client, it turned out the client for a short time, ran an unlicensed daycare.  This was only for a month and she had long forgotten about the daycare.  The candy was for children’s treats at the daycare.  Now that is a proper expense.  This was a perfect opportunity to demonstrate the need to jot down a short message on the copy of the receipt explaining the purchase.  This is not so important for obvious transactions.  But for transactions that may not be clear years later how they apply, a short note may make the difference between a receipt being allowed or disallowed in an audit.

I think this is another best practice. You don’t spend a lot of time making a short note but that short note will save you substantial time and money years later if you are audited.

I hope you find these “best practices” tips helpful and I hope that you follow me “Anita Steburg” on Facebook or  We have a lot of information there and I’m constantly trying to update it.  You can also follow me on periscope by searching “Anita Steburg” where I can provide you more of my best practices as a business owner as well as an attorney on how to grow your business in the most stress free manner possible.

Best Practices to Get Ready For Tax Time

I know it’s a hot subject and today I want to talk to you about how to set up your business for tax time success.  Personal taxes are due today because of Emancipation Day. Everybody has tax on the mind so why not blog about tax strategies. That way you have a great time and a stress free time to do your taxes and also to set you up for success.  I also will discuss how to set up your records so that next April, you’re able to just breathe easy, have a good time, and not be stressed.  In today’s blog I want to make sure that you understand what to do and so what steps are needed.  For those of you don’t know me, I’m the founder of Steburg Law Firm.  In my law firm we do tax controversy and resolution which means we help you out when you have problems with the world’s most powerful collector. It is not the mob. It is the IRS and how to help you resolve your issues. We help to place you on the right path as well so that it’s not a recurring problem.  I’m a tax attorney.  My information is based on doing hundreds and hundreds of audits with hundreds and hundreds of business owners over the years. I’ve been doing tax controversy since 2006.  So I’ve done this a lot and I know where the pitfalls are because I’ve seen them over and over and over with my clients.  I want to make sure that you don’t make any of those mistakes.

The first question that I want you to consider is where you keep your documents for a tax time.  One recent client being audited for 2013 dropped off her documents for my review. These documents were literally in a shoe box.  She actually provided different shoe boxes for different months and for different categories. I then had the challenge of correlating these with the tax returns.   She was telling me every April she gets so stressed out and spends so much time trying to go through those documents so that she can give the information to the CPA who then prepares the documents for the tax returns.  That’s not the best way to organize your documents and plays a large part in people’s angst during this time of year.

Now that we have reviewed how not to keep your tax documents, let me walk you through what I believe are best practices for maintaining the necessary backup documentation. The first thing you will need is to get yourself some file folders.  You can get these at staples or anywhere you purchase office supplies.  I like the ones that open with a tab that you can affix a label onto.  But you can put your documents in a binder.  You can use another type of filing system these are just cheap and easy.  Use whatever works best for you.

Now you must decide how to label the folders. There’s an easy way to do this.   In my practice, I see it all.  The best practice I think I have seen is to use a tax return to determine the categories.  You have the different categories of expenses for your business on schedule C.  If you turn the page on schedule C you have your other expenses.  Those are your tab categories. That is all you need to do to have your documents organized in a way they correlate with your on tax return.

I hope you like this and I hope that you follow me “Anita Steburg” on Facebook or  We have a lot of information there and I’m constantly trying to update it.  You can also follow me on periscope by searching “Anita Steburg” where I can provide you more of my best practices as a business owner as well as an attorney on how to grow your business in the most stress free manner possible.

The IRS has an employee (maybe even a whole department) whose job is to hang up on callers. 

As part of my tax practice, I am on the phone often with various taxing agencies.  When calling into the Internal Revenue Service (IRS) or the California State Franchise Tax Board (FTB), there is always a substantial amount of time spent on hold.  Hold times for the IRS can often be anywhere from one to two hours.   I have done this for years and anticipate this every time I call.  I simply work on other matters while waiting on hold.

Today I dial into the IRS to begin the lengthy process of speaking to an IRS Revenue Officer.  While I am on hold, I take other phone calls and work on other files.  After two hours and fifteen minutes on hold, my call is answered.  The IRS representative answering the call states “You’ve been on hold for two hours fifteen minute and have been transferred to me to disconnect the call.  You will need to hang up and call back and begin the process again.”

Evidently, this person’s job is to hang up on calls after two and a quarter hours on hold.  The IRS is monitored by congress and has been reprimanded to bring down their average caller hold time.  Instead of actually taking the steps necessary to better serve the taxpayer, the IRS has instead chosen to hang up on callers to artificially reduce the average hold time.

I don’t know why this surprises me.  After many years of practice nothing the IRS does should shock me but this is ridiculous even for the IRS.

I guess the moral of this is:

  1. Don’t expect a rapid resolution when working with any taxing agency.
  2. Don’t be shocked by anything done by a taxing agency.
  3. If you are seeking common sense and rational behavior, the taxing agencies are the wrong place to look.


Scammers and con artists are taking advantage of the public’s fear of the Internal Revenue Service (IRS).  The number of phone calls my office receives from clients who have been contacted by those pretending to be from the IRS has increased significantly.  The most common way for these thieves to commit fraud is through phone calls and emails.  They use the IRS name, logo, fake website or fake caller identification to try to steal your money or identity.  Here are 6 ways to identify these con artists so you will not be a victim of these tax scams.

  1. Initiating contact with you by phone, email, text or social media to ask for personal or financial information. The real IRS does not contact you by email, text or social media.
  2. Call you and demand immediate payment. The real IRS will not call you about taxes without first mailing you a bill.
  3. Require you pay a tax bill a certain way. The real IRS will not tell you how to pay the taxes such as prepaid debit card or wire transfer or request payment information over the phone.  Tax payments should be remitted only to IRS payment centers, IRS offices or online at
  4. Initiate contact and tell you that if you don’t pay a certain amount, the IRS will take action against you threatening arrest, deportation, suspension of a business or driver’s license. The real IRS does not threaten to bring in local police or other law enforcement groups to have you arrested or deported for not paying.
  5. You receive an email requesting you “Update Your IRS E-File”. The IRS does not communicate via email and would not ask you to send or confirm personal information via email or the internet.
  6. Receive a phone call to verify personal information so a refund can be processed. This is merely the scammer attempting to obtain your personal information.  The IRS does not call the taxpayer and request personal information they already have it.


  • If you are contacted by phone, ask for a name, call back number and badge number. The thieves will provide you with a phony name and badge number but they will provide you with a phone number which you can report to the Treasury Inspector General and FTC.
  • If you are uncertain if the contact was initiated by the IRS, call 800-829-1040 so a real IRS agent can help you.

Please share this list with your friends and family so they will not fall prey to these scammers!

Mortgage Interest Deduction

mortgage deductionsOver the recent years due to the mortgage meltdown, it became more and more common for individuals to own a house that is titled in someone else’s name.  Sometimes this was done to stave off a foreclosure, to refinance the home, to purchase the home or because of other legal issues such as divorce or creditor issues.  Mary wanted to purchase a home but was unable to do so since she had a foreclosure in her recent past.  Her parents had offered to purchase a home on her behalf, signed the mortgage and had the house titled in their name.  Mary lives in the house, pays the mortgage directly and pays for all expenses, repairs and maintenance associated with the property.

Mary came to our office to understand the tax and legal consequences of having the property transferred into her name.  In her situation, there was a common clause in the mortgage contract that stated that the mortgage was due in full if the property was sold or transferred so she was worried about transferring the property into her name.   During our strategy session, I found out that she had not been taking the mortgage interest deduction on her taxes because she had been told she doesn’t qualify for the deduction because the house was not titled in her name.  Well, I was happy to tell her she was able to deduct the mortgage interest and expenses even if her name was not on the title or on the mortgage.  Sounds too good to be true?  Nope.  Congress actually getting something right in the Internal Revenue Code allows for just this scenario for this unique situation.


According to tax law, the taxpayer can deduct mortgage interest payments if he or she is the equitable owner or legal owner of the real property that secures the mortgage lien.


There are two types of ownership: the legal owner and the equitable owner.  A legal owner is the owner of the real property according to the laws of that state.  Generally, this means the name that is listed on the deed to the property which secures the mortgage loan.

Equitable owner is also defined under the laws of the state.  Generally, this means that your name does not appear on title but you have “rights, privileges and burdens” that go with ownership of the property.  An equitable owner is the recognized owner of the property under some circumstances.

In Mary’s situation, her parents are the legal owner.  It is their name on the mortgage and deed.   However, Mary is making all the payments associated with the property.  Mary has a legal argument that she is the equitable owner if (1) she does not have legal title of the property and (2) she is making payments on the mortgage in someone else’s name.


To determine if Mary can deduct her mortgage interest, the court will look to all of her facts and circumstances.  The factors which the court will consider are:

  • The right to possess the property and enjoy its use, rents or profits;
  • The duty to maintain the property;
  • The responsibility for insuring the property;
  • Who has the risk of loss on the property;
  • Who has the obligation to pay the taxes, assessments and other charges;
  • The right to improve the property without the legal owner’s consent; and
  • The right to obtain legal title at any time by paying the balance of the purchase price.

A taxpayer does not have to prove every single element but you do want to demonstrate as many as possible.


In a tax court case, the taxpayer, Saffet Uslu, won the right to take the full deduction for his mortgage interest payments even though his name was not on the deed and mortgage.  Saffet’s brother had purchased the home in his name because Saffet could not qualify for a home loan due to poor credit.  In this case, Saffet’s brother had legal title and Saffet was deemed to be the equitable owner because (1) Saffet and his family occupied the property, (2) Saffet made all the mortgage payments and (3) Saffet paid for all the home expenses, including repairs, taxes, maintenance and improvements.  Since the court agreed Saffet was the equitable owner, he was entitled to the full deduction of the mortgage interest payments.


If you are in this situation, you can take the deduction for the mortgage interest deduction on Schedule A if you are the equitable owner of the property.  If you have filed your tax return and not take the mortgage interest deduction, go back and amend the tax returns if you are able.


Reg. Section 1.163-1(b)
Baird v. Commr., 68 T.C. 115
Daya v. Commr., TC Memo 2000-360
Uslu v. Commr., TC Memo 1997-551
Blanche v. Commr., TC Memo 2001-63


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